gross turnover

[d.v. gupta]

we are carrying business of tour and  travels. we purchase air tickets and package for our customer. the vendor pays us commission on purchase of tickets and packages. my question is whether my gross turnover will be sale value or only commission. suppose we purchase air ticket for Rs. 100000 and pays Rs 98000 . Rs 2000 is our commission. what will be our gross turnover for tax audit purposes.Rs 2000 or Rs 100000.00

[Surender Gupta]

Either you pay service tax on commission portion at the rate of 10% or you may opt to pay service tax at composition rate at 0.6% or 1.2% on the gross value of Rs. 100000/- as prescribed under rule 6(7) of service tax rules, 1994, if your service qualifies to be air travel agent services.

AI Summary

Service tax treatment: taxable either on commission income or via composition on gross ticket value for air travel agents. The operative tax treatment allows either taxing the operator's commission income alone or opting for a statutory composition mechanism that taxes the gross ticket/package value when the service qualifies as air travel agent services, thereby affecting service-tax liability and tax-audit reporting.